test5_ch09-10 - Achievement Test 5: Chapters 9 and 10...

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Achievement Test 5: Chapters 9 and 10 Name ___________________________ Financial Accounting, 5e Instructor ________________________ Section # _________ Date __________ Part I II III IV V VI VII Total Points 24 18 5 10 13 15 15 100 Score PART I — MULTIPLE CHOICE (24 points) Instructions: Designate the best answer for each of the following questions. Use the following data for questions 1 and 2 below: Quayle Company bought real estate, on which there was an old office building, for $800,000. It paid $80,000 in cash as a down payment and signed a 10% mortgage for the remainder. It immediately had the old building razed at a net cost of $70,000. Attorneys were paid $12,000 in connection with the land purchase and an additional $6,000 in connection with permits and zoning variances necessary for Quayle's new office building. $40,000 was paid for excavation for the basement of the new building, $2,800,000 was paid for construction of the new building, and $150,000 was paid for a parking lot and necessary walkways and driveways. ____ 1. The new office building should be recorded at a. $2,800,000. b. $2,846,000. c. $2,840,000. d. $2,916,000. ____ 2. Land should be recorded at a cost of a. $870,000. b. $882,000. c. $928,000. d. $922,000. ____ 3. Kotsch Textile purchased machinery for $80,000 eight years ago. It was expected to have a useful life of ten years, no salvage value, and was depreciated using the straight-line method. At the end of its eighth year of use, it was retired from service and given to a junk dealer. The entry to record the retirement includes a a. debit to Loss on Disposal for $16,000. b. credit to Depreciation Expense for $8,000. c. debit to Machinery for $80,000. d. credit to Accumulated Depreciation—Machinery for $64,000.
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Test Bank for Financial Accounting, Fifth Edition ____ 4. Which of the following should not be included in the plant assets (property, plant, and equipment) classification? a. Land on which warehouse sits b. Building housing corporate headquarters c. Parking lot used by visitors d. All of the above should be included ____ 5. Salvage (residual) value is deducted in the computation of depreciation expense in all of the following methods with the exception of a. straight-line. b. units-of-activity. c. declining-balance. d. All of the above include a deduction of salvage value. ____ 6. The three primary accounting problems associated with accounts receivable are a. valuation, disposition, and statement presentation. b. recognition, valuation, and statement presentation. c. recognition, valuation, and disposition. d. revenue recognition, matching, and statement presentation. ____ 7. Allowance for Doubtful Accounts is presented as a(n) a. addition to Accounts Receivable on the balance sheet. b. operating expense on the income statement. c. deduction from Sales on the income statement. d. contra asset on the balance sheet. ____ 8. Which of the following methods and bases of accounting for uncollectible accounts receivable is inconsistent with the proper application of matching? a. Direct write-off method b. Aging of receivables allowance method c. Percentage of receivables basis d. Percentage of sales basis ____ a 9. When recording exchanges of similar assets, a. losses are recognized immediately.
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This note was uploaded on 05/08/2008 for the course ACC 220 taught by Professor J during the Winter '08 term at South Central College: Faribault Campus.

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test5_ch09-10 - Achievement Test 5: Chapters 9 and 10...

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